Suze Orman’s Ultimate Retirement Guide

Jason 0 Comments January 29, 2024 Retire Wealthy Retirement Planning Tips for Retiree's

Can you all live The Ultimate Retirement? You can. (man) From the New World Center in Miami Beach, acclaimed personal finance expert Suze Orman provides essential advice to make your retirement more successful and secure. Every little actionthat you take can makea tremendous difference. It's never too soon to begin. Fear no more. (man) Join us for Suze Orman's  "Ultimate Retirement Guide." Please welcome Suze Orman! [loud cheers & applause] Thank you. This show is called "The Ultimate Retirement Guide." A very interesting name for a show, isn't it? 'Cause can you imagine, can you just envision, what is your dream of an ultimate retirement? What do those words mean to you? What is so interesting is that yesterday I was talking to somebody, and I asked him, "What does an ultimateretirement mean to you?" And he answered in a veryincredible way; he said, time to be with my family,time to see friends, time to do thingsthat I've never done before.

He did not say one thingabout money at all. Then I thought,now that's interesting, and I started to goto every single person, "What does ultimate retirementmean to you?" "What does ultimateretirement mean to you?" I even today, asked my  makeupartist and my hair person, "What does it mean to you?" And the majority of the people either answeredlike the first person did, I'm going to have timeto go see my family and my friendsand do things I want, or they answered,"I have enough money, I don't have to worryabout money." So that'swhen I put it together, believe it or not that, if you have your money  together,all you care about is what you're going to dowith your time and how to connectwith those that you love.

If you do not haveyour money together, then the answerto that question is about money. I want to have money, I want  to be able to pay my bills, but they didn't at all mention about what they want to dowith their life. The ultimate retirement is about your life being onethat you enjoy, that you love waking upevery single morning to, that you love to seethe sun rise and you love to seethe sun set, versus oh another day, oh I have  todo this, I have to do that. So I ask you, what isyour ultimate retirement? Ask yourselvesthat question right now. And I'd like to know how manyof  you out there are on track to reach what you consideryour  ultimate retirement to be? How many? Please raise  yourhands if you think you are. In fact, don't raise your hands,stand up.

If you're on track to  reachyour ultimate retirement. Alright, stay standingfor a second. Now I want you to lookaround this room 'cause this isa very sad picture. This is not 50 percentof  this room even standing up. This is not even 40  percent,this is like 20 percent of the people in this roomare on track. That means 80 percentof you are not. You can sit down, thank  you,I'm happy for all of you. But by the end of this show,I  hope I'm going to be happy for 100 percent of you because here's what you have gotto understand. If you are not on track, thenthe  question has to be answered, why not, and what can you doto get on track? Because every single one of youhas what it takes to achieveyour ultimate retirement. I look around and I see  thatthere are people in this room that are older and there  arepeople who are younger. I just want to say, for those of you who are youngerin this room, you have to know that now isthe time to learn from those who are older.

Because it is never too soonto begin to achieve your ultimate goal. And isn't it truethat the reason that you work every single day is so that one day you couldretire from working? That is supposedlywhy you all work. However, my goal for all of youis to love working or lovewhatever you're doing, even in your retirement years that you continue to do it. You know,today it's very different than it was 40 years ago when I first started asa  financial advisor in 1980.

Can you believe that? 40 years ago. How old was Suze Orman40 years ago? [laughter] Who cares about 40 years ago, let's talk about how old I amright now. As I stand in front of you,I'm 68 years of age. [applause] No… Wait a minute,there's something wrong when somebody applauds youfor how old you are! [laughter] But here's what's fascinating about that. I never thought I was going to be 68. Did you ever think that you  weregoing to be almost 70, or you were going to be 50? Or do you remember being like  in your 20s or in your 30s and somebody in their 60swould be talking to you and you'd go, god, they're  old,[laughter] they're really old. And you go,oh, I have a long time, and then all of a suddenyou wake up one morning and here you are, and you  arealmost 70 years of age! That is a big deal! And I don't know about you,but  it freaks me out. [laughter] It freaks me out, and  becauseI love my life so much, that means I don't havea lot of years left really to live everythingthat I love doing.

But you know what I mean,but that's a reality that starts to comein your head, oh my god,I need help getting up. You know, I walked up those stairs yesterday, it's not easy for me to walk up those stairs. Years ago I would have popped upthose stairs. But as the body may be aging, the one thing great about moneyis  that it doesn't have to age. You worked your entire lifefor money. When you get older,you now have to make sure that your money worksits entire life for you. 40 years ago, 'cause I always specializedin retirement planning, I don't know if you know thatmy  degree is in social work, with a specialty in geriatrics. [applause] So I had this lovefor the aging. I wanted to make surethat  their lives were fabulous. And very early on I realizedwhat  makes their lives fantastic is when they have money,when  they can pay the bills, when they can hire an aide, when they don't have to worryabout it, and they don't have to bea  burden on their children.

That's what makes it fantastic,but  40 years ago, you guys, it was so easy,I have to tell you. There's a very different  storythan we have right now. 40 years ago you hada situation where almost every single one of the peoplethat  I saw had a pension plan. And their pension also gave  themfull health insurance for them and their familiesfor their entire lives! Real estate was relativelycheap,  believe it or not. Interest rates, yes,they were through the roof, they were 16 to 18 percent,but  you still could have a money market accountor anything, and you could be earning 18,19, or 20 percent.

You could get 14.5 percent backthen  on a 30-year treasury bond. Are you kidding me? So if you wanted your money  inretirement to be safe and sound, you had a place to put it. So I could easily say to people, do this, do that, do that, do this and it  wasdone– just that simple. It's not that simple today. As I'm recording this show,we have interest rates that are the lowestthey've ever been. Good luck finding2 percent anywhere.

Real estate prices have absolutely gonethrough the roof, you have a stock market that  hasalso performed incredibly well. Who knows,will it go on, or will it not? So now you're afraid;what do I do? I don't get a pension, I  can'tput my money anywhere safe and generate income,I still owe money on my home, I'm possibly even still payingfor  my kid's college education and I don't know what to  do,I'm afraid of everything. Fear no more, because there are thingsthat you can absolutely do to change your life around. And what's so fascinating aboutmy  job as a finance expert is to be able to come up withadvice  to fit today's economy, today's economyand tomorrow's economy. And not continueto give you advice that I would have given you40  years ago, 10 years ago, or possibly even 5 years ago. You have to be getting  advice that is good for today that will carry you through your tomorrows, so the question is,are you getting that advice? Do you know what to door are you listening to your next-door neighbor who listensto your next-door neighbor who listens to the other next-door neighbor? Before you know it, you're  all making the same mistakes.

No, no. "The Ultimate Retirement Guide" is the name of this show, and this show is for every single one of you, to guide you from wherever  you happen to be right now, right here, to where you want to be, to where I want you to be. 'Cause I want youto love your life, your personal side of your life, your financial side of your life, 'cause I no longer want any of you to have one foot in one boat called your life and another foot in another boatcalled your money, 'cause when those two boatsstart to separate, you have problems. I want you to have both  feetin one boat called life where you love everythingaround  you, you feel secure, you know whatyour money is doing, you know what you can doand you take all of that with the peoplethat you love around you and you wake up every singlemorning with a smile. That is the goal of this show. Now, you all came here. Maybe you just came hereto see me. Maybe,but hopefully you came here because there is somethingthat you need to know, 'cause I'm going to talk aboutwhat  you need me to talk about.

So who has a question for me?Yes ma'am. Oh my god! Hi Suze. So exciting to be hereto finally talk to you, I'm so grateful for  anyinformation. (Suze) How are you? Your life good? (woman)  Yes.(Suze) I'm glad, what else? My financial track is because of you, but I have a question regarding long-term care. Should I start that because I'm  in my 50s, I'm going to be 55, and should I start that now, or  should I focus a little bit more 'cause I don't have my 8-month emergency fund, which I know you were alwaystelling us to do that. The perfect age to buy long-term care insurance believe it or not, is about  59, right before you turn 60 'cause there is a big premium  increase at that point.

Up to you to decide if you want to do it or not. Do you have credit card debt? (woman) Yes. So you have credit card debt, you don't havean 8-month emergency fund, and yet you want to buylong-term care insurance. (woman)No, I really don't,but  I want to make sure that… [laughter] Do you haveany student loan debt? No. What is the interest rateon your credit card debt? It's like 16, 15. Do you contribute fully to  your retirement account? Yes, Roth IRA. How much do you havein your Roth IRA? Uh like 45,000. (Suze)And how much do youin credit card debt? 4,000.(Suze) 4,000. I have $4,000 at 16 percent, I have $45,000 of how much of thathave  you originally contributed? When I first started it? So altogether it's worth 45,000,how  much of that has it grown, have you put in 30,000and now it's 45,000? Oh no, I started with like1,000, 2,000 and then I deposit 550,my max every month.

But you put at least $4,000  ofthat, you put in of your money. (woman) Yes. (Suze) Alright,so listen to me now. I want you to withdraw from your Roth IRA $4,000 and I want you to pay off your credit card debt. How can I guarantee you a 16  percent return on your money? Pay off your debt. (woman)I thought I'd get penalized for… That is why this show is so important. Any money that you originally put into a Roth IRA, the money that you deposited into this account, you can take out at any time  without taxes or penalties, regardless of your age or how long the moneyhas been in there. It's the earnings of that money  that have got to stay in there for at least5 years and until you  areat least 59-1/2 years of age.

Then you can take it all out, tax-free. But I would much rather see you take out $4,000, get rid of the debt. Does that debt make you feelinsecure? (woman) Yes. If you want to be secure, which I'm telling is the goal of money, you have got to get ridof the things that make you feel insecure. So you have the money to get rid of that which makes you feel insecure, and that money is supposedly supposedto make you feel secure but it's not making you feelsecure  'cause you feel insecure, so let's take money from here, get rid of what's making  youfeel insecure over here. Now you feel secure,and when you are secure you are more powerful,and when you are powerful you attract peopleand people pay you, people give you a job  promotion,people are your customers. So when you are more powerful,you attract people, people control money, now  you'regoing to control more money. Got that? (woman) Got it. (Suze)That's what you're going  to do.(woman) I feel more secure.

[applause] So I just want to touch brieflyon  long-term care insurance. Long-term care insurance may be one of the most importantinsurances you will ever buy in your life. And the reason is this: your health insurance does not payfor a long-term care stay, Medicare doesn't reallypay for it. You will be the ones that  payfor a long-term care stay out of your own pocket. And when you look at the cost, it's 10,000 a month,15,000 a month, it is a lot of money.

The average age of entryinto a nursing home is 84. That age is key. Why? 'Cause if you buylong-term care insurance, you have to knowthat you can afford it from the yearthat you purchased it all the way until age 84or longer. Should you be buyinglong-term care insurance and going, but Suze I doubtI'll ever use it. What insurance do you buy in the hopes thatyou're going to use it? Really, do you want your hometo burn down? Do you want your carto be in an accident? But you all carry insuranceon that. One out of three of youwill spend some time in a nursing homeafter the age of 65. Now, a lot of you know when it comes to long-term  careinsurance, that premiums, if you have a long-term careinsurance policy, has skyrocketed on youover the past few years. So if you buy long-term careinsurance, you have to factor inthat if  you're paying$4,000 a year for it, you may be paying $8,000 a  yeara few years from now. Can you afford it? But I can tell you this: that out of all the yearsthat you pay for your premium, it will beless than you will pay for one year in a nursing home.

So if you can affordlong-term care insurance from the time you purchase it,all the way through, I would absolutely go aheadand do so. Alright, we are going to takea  break, and when we come back, I'm going to continueto answer your questions. [cheers & applause] Thank you! Alright, let's take a question. I have a good-looking man right there. Yes sir? Hi Suze, welcome to Miami.(Suze) Thank you. With increased longevity, and  ifone does not have a pension, how does one knowwhen to retire? Because I'm really not sure  onecan really measure that because we don't know how longwe're going to live and I'm not necessarily surewe  can save enough to retire.

Great, let's talkabout your life expectancy. My mother, God rest her soulnow, 7 years ago, lived till 97 years of age. The most important thing  thatyou should all understand in reachingthe ultimate retirement is that most probablyyou are going to live until your late 80s,early or late 90s. And that actuarially speakingis the truth. So it's not like it was back  inthe '30s or '40s or years ago when Social Securityfirst came about, when you couldn't get  SocialSecurity till you were 65, but did you know that the average life expectancywas still 62? The buggers never expected youto live long enough to collect Social Security! How do you knowwhen you are ready to retire? Alright, so let's talk about that. Financially ready and emotionally ready are two different things.

'Cause you might be readyfinancially to retire, and emotionallyyou might not be ready to lose your identity of what you do. So they're two separate things that you have really gotto have clear. So let's just talk about  thefinancial aspect of it now. You have got to be very aware of what your expensesare  going to be in retirement. You have got to know, what does it cost youto pay your mortgage, your car payment,your electricity– everything that isan absolute expense, that is not going to go away.

Once you know your expenses,then you have to know what are your steady streamsof income that will be payingthose expenses. If you have a pension,if you have Social Security, if you havethe minimum distributions from your retirement accounts that you are going to have tostart taking out, if you have an income annuity,whatever it may be, will it cover your expenses,or will it not? Hopefully it will,because if it doesn't, then you have tomake a decision, do you need to continue to work? Should you retire from the jobyou currently have and take on another job? You have to decide all of those  things, but in the equation, here's what I want to sayto you– Social Security.

'Cause for the ultimateretirement,  the biggest decision that you are going to make  iswhen to take Social Security. And do not takethe easy path here. You are to wait till at  leastfull Social Security age. Now I know a lot of youare like, no way, I get Social Security at  62,and I'm going to take it. Do you know that if you  waitedfrom 62 to the age of 70 to take Social Security,you  would get 76 percent more than if you took itat the age of 62? So when you arefiguring out  your incomeversus your expenses, do not include Social Securityuntil you are 70. I would rather see you use  upmoney in a savings account or a retirement account to  getyou through all those years than for you to takeSocial Security earlier to get through those years.

Why? Because especially from  the ageof 66 or 67 till 70, you're guaranteed an 8 percentincrease every year. You're notgoing to get 8 percentin  the stock market guaranteed. You're not going to get8 percent in  a certificateof deposit right now. The new retirement age,seriously, should be a minimum of 70 today. I know, it sounds like, uh! But you know whythat sounds terrible? Because you hate the jobthat you have.

[laughter & applause] If you loved what you did,if  you felt like you were a vital part of societyas well as your own life, if you did not have one footin your money boat and another footin your personal lifeboat, but you were in one boat,and you were steering it where you wanted it to go, you would not be upsetabout  having to work till 70. You would actually be sayingto yourself, I hope I get to work  forever,forever, 'cause I love it! I hope I get to do this forever. Do you think I do this 'causeI  need to make money? No. So the goal of you working,  Iknow you think is to make money. And it is that,but it's also because you lovewhat you are doing.

And it makes you feellike you have a purpose. Because what's interesting is when you can't define yourselfby  what you do, your job title, and then who are you? You need to know the answerto that question. We have a question right here.Yes sir. Suze, I wanted to knowhow to go about finding one's ideal financial advisor. That's a good question. A really great financial advisoris somebody who's been a financial  advisornow for 15 or 20 years. They have seen up markets,they  have seen down markets, and then they've seen up again, good economiesand bad economies.

The very first thing they tellyou  is here's how much I charge. Here's how I work,here's what I'm going to do, and then they should at least beinterviewing you for an hour or twoto understand. Are you afraidof the stock market? Do you feel goodwith the stock market, are you happy in your marriage,are  you going to inherit money, are going tohave to take care of  yourparents, do you have a will, do you have a trust, do you  haveany credit card debt, do you own a home, do you  wantto own your home outright, do you have kids, do you want  toleave money to your kids? They should be asking youevery possible question, everything in your life,  becausethey have to know who you are as a person before they  caninvest your money for you.

Here's what you really needto understand about finding an advisor. You should never talk  yourselfinto trusting anyone– ever. When going to seea financial advisor, if it doesn't feel right,guess what? It's because it's not rightfor you. But what do you do? You talk yourself into  trustingthat person– big mistake. So do not do that. Get up and walk out. Don't be guided to have  somebodybe a captain of your boat and take you where they want  itto go versus yourself. You have got to belike this woman here, with this captain's hat on.Right? And you have to knowthat your financial journey into your retirement yearsis started where you have chartedthe right course. You don't want to bedoing something just because some financialadvisor  tells you to do it. It's got to make sense to you, it's gotto make sense to you. Next question, who has one? Yes. Hi Suze, thank you for coming. I've followed yousince the beginning, your first book,it's so old, but I… (Suze)That actually wasmy second book, but that's beside the point. But lookat that picture on that. I want your signature today That picture on that bookwas taken in 1994.

Don't you think I look betternow? (woman) Yes! [applause] Gorgeous. But what isyour question for me? My question is if you already,well,  I was fortunate enough to have a pension plan,but it was way before the Roth IRAand all that existed. If you've got quite a bitof funds in that IRA now and you have to roll it  overinto a Roth for tax purposes and for your beneficiaries,  butwhat about that lump sum tax that you have to payon that money? How do you getthat large sum of money? If I were you,here's what I would do. If you have a lot of moneyin a pension or a retirement account  that'spretax, first roll it over custodian to custodianto an IRA rollover, no tax. Then little by little, if  youwant to convert it to a Roth, after consulting a CPA, decideon  how much you can convert each year without it affectingyour tax bracket. The last thingyou would want to do is to take a large sum of money and convert it,have to pay taxes on it.

Also, if you are near retirementand  you don't have at least 10 years to recoup the taxesand  the growth on the taxes, do not convert it to a Roth. Leave it in a traditional. Just because Suze Ormanloves a Roth, sometimes it makes senseto leave the money that you have in a traditionalretirement account because you're going toretire in 2 years. So if you now convert itto  a Roth, you're going to be losing all that tax money,you're better off just leaving it where it is,and  paying the taxes as you go. 'Cause either way,you have to pay taxes. So when you convert, you  wantyour money in the Roth for a long timeto recoup the taxes with the growththat you will sustain. Next question,who has a question for me? Hi Suze, you mentioned  bewary of insurance products, can you elaborateon that please? Oh you betcha I can. Insurance is insurance,investments  are investments, and the two should not cross. Years ago, when everybodywas buying mutual funds and making all this money, when all mutual fundshad a commission to it, the insurance companieswanted to get in the game.

They were like, man,maybe we can create a product and sell it to all the peopleout there who want to investin the stock market and make it seem like it's  morebeneficial to do it that way and we'll captureall of that money. Now, I have been licensedover my career in almost every single stateto sell insurance. Actually, not to sell insurance,to bash it as to why most of youshould not buy it when it comes to an investment.

I personally thinkthe only type of life insurance that makes sense,is term insurance, term insurance that's goodfor  a specific period of time. Universal, variable,and whole life insurance are the worst investmentsyou  could ever buy, bar none. They just don't make sense. So many times they're soldto  you as– you can invest in such a wayand have it all be tax-free and experience the stock  marketand get life insurance. The commissionson most insurance products are so high, you have no idea. Possibly 70 to 80 percentof  your first-year premium. But today, you now havebrokerage firms out there that are charging you no commissions at allto buy stocks, no commissions at allto buy exchange-traded funds, no commissionsto buy mutual funds at all.

Are you kidding me? If there was ever a timeto want to be investing in the stock marketcommission-wise, now is the time. So does that make sense to you? Investments are  investments,insurance is insurance, do not mix the two, do not mix the two ever,in my opinion. Next question. We have a question right here.Yes sir. Hi Suze, what's your opinionon  target retirement funds? Yes, a target retirement fund, which is how many of youinvest for retirement, thinking that that fund is going to give youyour ultimate retirement. I personallyam not a fan of them. And a target fund, just to  beclear, is that you decide the yearthat you are going to retire. You target the yearof your retirement. Then this mutual fund isinvesting  your money to do what? For you to be ableto retire on that date, and the closer you getto that date, the more moneythey put into bonds, the less money they putinto stocks.

So they do all the work for you. And it is one of the mostpopular  investments out there in 401(k) plans because  youdon't have to do any work. You just put your money inthis  target date mutual fund, and you just let it go. I'm somebody who doesn't  liketo go on automatic pilot. I'm somebody whowhen I'm about to retire, I want to look at whatthe economy is doing and maybe it's a good timeto  do what, to be in bonds, but maybe it's a better timeto be in stocks. Let's go back to 2008, 2009. If you had had a targetmutual fund for 2009, 2008, you would have been mostlyin bonds at that point. Great, so you didn't get  killedin the stock market. But in 2010 and 2011 and  2012and 2013 and 14 and 15 and 16 and 17 and 18and 19 and 20, you missed one of the biggestbull markets ever. So should you have been in bondsduring that time or should you,even though you had retired, should you be in the stock market? Because you all have to keep upwith inflation.

And inflation is somethingthat is very serious. So your ultimate retirement,  andlisten to me closely here now, is one thatwhen you actually retire, you do not wantall of your money in bonds. You want some of your moneyin stocks because even though stocks maygo  up, and stocks may go down, in the long run, you will berelatively okay, especially if they aredividend paying stocks, so that you are ableto get income while the market is going down.

So please don't be one ofthese  people that go to retire and you go totallyinto bonds. Next question. (woman)Hi, good afternoon,I have two questions. The first question actuallyis the follow-up to the whole life insurance,that  question is for my mom. After she heard what you  saidpreviously, she had a question. And the second questionis mine about annuities. So my mom's question about  thewhole life, she has two policies and being in her 60sshe wants to know now, what insurance should she getbecause now she's not very pleased  withthe whole life insurance? (Suze)Because Suze Orman said  that.>> Because Suze Orman said that.

Here's the question,watch this interaction now. This is a good financial  advisorasking the question before I answer a question, because I can't just answer  herwithout knowing things. Does your mother,in her opinion, need insurance? Is anybody financially dependenton her? If your mother were to die,is  anybody– where's Mama? Right there.(Suze) Mama! Too shy to askher own question. (Suze)I'm not answering it.

Mama! Okay, answer my question,answer my question. No, no, Mama, come on down,come on down Mama. [applause] Mama talk to me! Hi Mama. Hello. There you go, so Mama,if you were to die today, is anybody financially dependenton you? No. Why do you have insurance? I have it because I don't want  my kids to be responsible. Yes, but if you die, your  kidsaren't going to be responsible for you anymore'cause you're dead.

Right? (mama) True. You want them to appreciateyou while you are alive and enjoy youwhile you are alive. So do you have this policysimply  to pay for your funeral? Absolutely. Alright, and how muchof a death benefit is it? It's 10,000 on both. (Suze)So you have two  policies.(mama) Two policies. And how long have you beenpaying on it? (mama) For five years now.(Suze) For five years and how much does whole lifeinsurance cost you? Per month? (Suze) Yes. $56 a month. So that's $600,almost $700 a year, so you have already paidin $3500 in 5 years to have $10,000 of insurance,and as you get older, 'cause you're still young,you're in your 60s. (mama) 69. (Suze) 69, and so you're not projectedto  die for another 30 years. Yes, my mom is 94.

Alright, so you're going to benow paying $50, $56 a monthfor all those years. Really? I don't think so, what isthe  cash value of that policy? If you were to cash it  outtoday, how much is in it? You know, I really didn'tdo the math. Alright, so you're going to  findthat you put in $3500, however, good luckif you have $1000 in there. (mama)Yes, that's what my daughter was telling me. So here's what you're going to do. We know you're healthy, we know everything's good. What would it feel like to  have$1000 to your name right now? Because, if you're worriedabout  paying for your funeral, that says to Suze Orman,you don't have any money.

(mama) Yes, I realize that now. Alright now, guess whatwe're going to do? We're going to cash outthat whole life policy, first you got to make sure Mama's healthy, if Mama's healthy, we're going to cash out that whole life insurancepolicy,  the insurance agent might say, but the taxes–no  taxes– you put in 3500, you get back less than that,no taxes, and you're going to put  thatmoney into a savings account, a high-yieldmoney market account or savings account onlineand just watch it, and then you're goingto take the $56 that you wereputting towards the insurance and you're going to put it  intoyour own savings account.

And before you know it, you'regoing  to have $10,000 in there. And then you'regoing to have $20,000 and then we're goingto go out to dinner Mama! Yes we are! (mama) Thank you. (Suze) That's what you'regonna  do. (mama) Thank you. And Mama, I just have to  askthis, was that that hard, to stand upand talk for yourself. Oh no, no, no, I didn't knowshe was going to ask, I was just mentioning itto her up there. (Suze)She said, you said right, that she was afraid,one of you is lying! Right? Have I got this right?One of them is lying.

The daughter is standing theregoing uh-uh, she said I ain't gonna do this. Alright, that's fine, alright. I was, I was. [laughter & applause] (Suze)Alright, your question. (woman) I've been looking into annuities, and I wasn't sure if it's  a smart thing for me to do. Why were you lookinginto annuities. Because after readingall of your books, I was trying to be preparedfor my retirement. There is no way that you reada book by Suze Orman that said to buy an annuity!. (woman)No, I know, I know,you  did not recommend that, but I wanted to be prepared,so  I looked at everything that's availableand everything possible. So I'm asking your opinionright now. So here's whatI would tell you– annuities are startingto change. Index annuities okay, singlepremium  deferred annuities okay, variable annuities I really  donot like on any level, although even those arestarting to change. Here's what I do wantto tell you, and you're going to be surprisedat this. Remember how I stood up herebefore, and I said, "What I used to tell you  beforeI'm not telling you now." You know how you told me,a  lot of you raised your hands, you said that you're afraid  thatyou don't have enough income and you don't know whatyou're going to do.

It is possiblethat an income annuity where you deposita specific sum of money and they pay you outa monthly income is something that you may allneed to look at as you get older,and you want to retire. Would you be doing that now,given that Mama's 69, that means you have to be  what,how old? (woman) 47. (Suze)47, way too early for you to be thinking about thison any level. No really, the way you would  bethinking about it would be I want to be out of debt,I  want to own my home outright, I want to be saving moneyin my Roth IRAs, I want to becutting down on my  expenses,I want to do all those things far beforeyou would do an annuity. Okay? You know,I just want to say this. I only wish I had a magic wandthat I could wave and say to all of youin this room and all of you and the millions of you  that will see this program, that I can wave my magic wandand make it all so that you are never ill,never in any situation where you hadany financial distress, and you had all the  financialindependence in the world, and that everything wasgreat for you.

I don't have a magic wand.But guess what? You do, you have a magic wandfor your own lives. You might think that you don't. You might think well,what difference can it make if I make this little wave  here,and I do this wave here? Every little actionthat you take can make a tremendous differencein your life. Can you all livethe ultimate retirement? You can,but you have to want to. And you not only have to wantto,  you have to take the actions that absolutely make itpossible, which means you pay off the mortgage onyour  home, you get out of debt, you start to haveRoth retirement accounts, you do everything today,  yousell something, you downsize, you do whatever, but you have  tohave a plan for your lives. So we have just answeredmany of your questions, and we have one more segmentto continue to do so, so that all of you can havean ultimate retirement. We will be right back. So in terms of an ultimate retirement, if I were to give you one piece of advice, as to how do I make the most out of my money, Suze Orman? With interest rates low, I don't want to be in the stock market, what should I do? Ready for this one? Pay off all of your debts.

It should be mandatory that if you own a home, that you own it outright by the time you retire. If you do not, and you plan especially to stay there, you are making one of the biggest mistakes in my "Ultimate Retirement" playbook. Because if you could simply get rid of your debt, the more debt you have gotten rid of, the less income you need to pay the expenses on that debt, and now you can start to make more out of your money. Now, for those of you who have retirement accounts, you probably have a traditional IRA or a traditional 401(k) or 403(b) because you wanted the tax write-offs today.

And you just didn't want to pay taxes today. Big mistake. In my retirement playbook, I would have all of you in Roth IRAs, Roth 401(k)s, Roth TSPs if you're in the military, Roth 403(b)s if you're a teacher, I would have you in Roth accounts. Why? Because everything that you have in a Roth, you give up the tax write-off today and you get to take that money out later on tax-free. With a traditional retirement account, you get a tax write-off today, but when you go to take it out, you have to pay ordinary income taxes on it. You all want that tax write-off today, even though we are in the lowest income tax brackets in the history of the United States.

So you have all got to start to think different. We're not 40 years ago, we're today. And the rule of thumb is this: you want to know what you see is what you get. What good is it going to do you if you have all this money in all these retirement accounts that you're going to have to pay taxes on when you retire and they force you  to start taking money out of those accounts, April 1st of the year after you turn 70-1/2. So what is Suze Orman telling you to do? I want you to do a few things. If you know that you are going to have a mortgage when you retire, and you are going to be keeping that home, I want you to continue to contribute to a retirement account that matches your contribution up to the point of the match and then everything after that, I want you to pay down the mortgage on your home.

That guarantees you to be debt-free, you don't have to then worry about the stock market, or interest rates, and nothing will make you feel more secure in life than owning your own home outright. Now I have said in most every single show I have ever done, that the goal of money is for you to be secure. So you have got to look at your lives and ask yourself, what in your life, financially speaking, makes you feel insecure? Because whatever makes you feel insecure, you have got to remove from your life so that you can feel secure. Got that? Who in this room would feel more secure if you owned your home outright? Raise your hands. Well, now we have  almost 100 percent participation. [laughter] So that's what you are looking for. These are all things that you need to figure out on your own. That you can look at this and go, what can I do so that I have the ultimate retirement? And what you can do is to make little moves today– pay off the mortgage on your home, have Roth investments, know that you're going to claim Social Security at 70.

Decisions like that will change your entire life. Next question, who has the mic? Yes. Hi Suze. Right here, it's Mama Bear. Thank you Suze. I hope I'm right on that right? Yes! [laughter] I'm 34 weeks pregnant. I've actually been a fan of yours since I was 15 years old. I read your book, Young, Broke… "Young, Fabulous, and Broke," yes. That book. I currently maxed out my retirement accounts, I don't qualify for the Roth IRA, we're going into this stage, so my question is surrounding the 529 plan versus the prepaid college, which is better? And do you have any credit card debt? >> No.

>> Eight month emergency fund? >> Yes. Absolutely, and you're contributing now. That's what happens when a 15-year old… [cheers & applause] …watches and readsabout money, and then here they arein a situation where we all wish we could beand  turn back the hands of time. So it's never too soon to begin. It is never too soon to begin. I like both a lot. If your child's goingto go to a school like in Florida or whatever,I  like prepaid plans a lot because it takes outall the thing of is the market up, what should  Iinvest in, what should I do? And when you have kids, and  youhave everything going on, unless you wantto deal with all that, then a prepaid plan is probablyhow I would go.

If you like investingand whatever, 529 plans are equally as good. But here'sthe question back to you. You're aboutto be a parent, do  you havea living revocable trust? I do not. Do you know that minorscannot inherit money? I did not. So if you have a child,and  you have all this money, your 401(k),everything that you've done and now you want to leave it, you and your spouse in a  caraccident, it happens everybody. And now you want to leave thatto your children. It will go in a blocked accountuntil  they're 18 years of age. If they hada living revocable trust, you would namea successor trustee as to who would watch over  thatmoney for your minor children. Very important for you to have.>> Thank you. And most of you in this room,do not have the most important documentyou  could have, bar none, a living revocable trust. A will is simply a documentthat says where your assets are to goupon your death. That is all it does. And it does it in the most  costand effective way possible. A living revocable trust, living, you do itwhile you're alive, revocable, you can change itanytime you want.

Trust is the nameof the document. While you are alive,you transfer your assets, the title to your home,your bank account, your stock brokerage accounts,whatever it may be into the title of the trust, held for your benefitwhile you're alive, and your beneficiaries'  benefitafter you have died. What is the differencebetween the two? A will has to be probatedin most circumstances. That can take months, it  cancost thousands of dollars, it absolutely,that's all it does. A trust, 2 weeks later, 3  weekslater after you've died, everything passes to  yourbeneficiaries free of probate. But that's not the reasonyou should get it. The reason you should get  itis because of incapacity. If something happens to you,who's  going to pay your bills? Who's going to writeyour checks for you? Who? A willjust says where your  assetsare to go upon your death.

A trust, a good one, that  hasan incapacity clause in it, says that somebody elsecan sign for you when you no longercan sign for yourself. And this is important. The other day, I was in the  banktaking out some money and this really old womanin  her 90s was standing there and she said to the teller,she said, "I have to ask you a question, how much moneydo I have left in my account?" And the teller told her. She said, "That's impossible,it's impossible, "I know how much money I shouldhave in there "and that's not what's in there. "And I kept gettingthe statements, "but I couldn't believewhat I was seeing "so finally I thoughtI should come in. There has to besomething wrong." Now, either she's spending  moneythat she doesn't know, or possibly somebody isripping her off of money. But do you understand how not only do you have to protect yourselves as you get older, but every one of you in this room should be protecting your parents as well.

Your parentsthat become  vulnerableto all kinds of people that befriend them and then doall kinds of things and before you know it, all this money is gone. So a trust is possibly the most important documentyou can have, bar none. You know, I'm just wondering,is  anybody in this room afraid of when you get older you're not going to be ableto pay your bills, and you're going to be dependenton your kids? Does anybody in this roomhave that fear? All right, you do, you do.

Can somebody talk about that? I would like to hear somebodyaddress that. This woman right here,all right, you have a fear. Yes, I was… You can put your purse down. [laughter] So I have a 99-year-old mother, which getting back to the  lifeexpectation means that you know, I supposedly have quitesome time ahead of me. I have no kids, I have no long-term insurance, I have no debts. So I don't know who's going to take care of me. I lost my job 3 months ago,  which I needed for living. My mother and I own an apartment where she lives right now, and I rent another where I live with my husband. I have a 401(k), I have a CD,  and I have a savings account. (Suze)So you're afraid. Of course I'm afraid and  as I said, I have no kids, so nobody to look after me.

And how oldare you? 73. You're 73, and what do you dowith this fear? Like who do youtalk to about it? I'm serious 'cause how manyof you in this room can relate to what this womanjust said? So do you see first of all that you're not alone,you're not alone. Most of America is inthe situation that you're in, where we are getting older,we  don't have any money, we don't have kidsor if we do have kids, they need us to take careof them, [laughter] and good luck themtaking care of us.

So what do we do, where do we goto start this conversation? Here's what I wantto say to you. 73, so obviously you've startedSocial Security. What you have to dois understand that 73, even though I know it  feelsolder, 'cause I get that, 70's a big one, it's big numberto  pass, even approach up to. Is thatyou're still in the youthof  your life if you're healthy. So there are all kinds of thingsthat you can do, whether it's continuing to  work,saving money in a Roth IRA, making sure that youdo not have any debts, but fear is the maininternal obstacle to wealth and the only way to conquer fearis through action. Now, the actions that you aregoing to take are particular to your situation,and  you're going to have to sit down with your husbandand go, what can we do? Should we rent a smallerapartment right now? Should you sell the homethat you have right now and downsize now,'cause what happens is we keep putting off all of  thesedecisions until we're older and older and older 'cause  wedon't want to have to deal.

Rather than making a decision  oflet's sell the house right now, let's move to a placethat's less expensive, let's take the differenceand do it. Oh, I'm renting, alrightI'm  renting a 2-bedroom place right now, let's renta one-bedroom place. Oh, I'm renting a one-bedroomplace,  let's rent a studio. Oh, we have two cars,let's go to one car. So you have to now becomea warrior and you have to not turnyour  back on the battlefield. And the battlefield isknown as retirement and how are you going to payfor yourself. So you're going to start to  givebirth to financial children by the name of Bill,Buck, and Penny.

[laughter] That's pretty good! [applause] And you're going to have to  makedecisions with your husband. What can you do,and I don't care if it's to save $100 a monthhere,  you cut your cable bills, you do whatever it isthat you can do to save $50 here, $100  there,and you would be amazed at the more moneyyou start to accumulate, the more secure you'll feel. But you do nothing and you  havenobody to talk to about it. So here's who you'regoing to talk to about it. You're going to talk to yourselfabout it. And you're going to be the  onewho solves that problem. And you're going to be the  oneto figure out what you can do to either make more moneyas well as spend less. 'Cause the key to the  ultimateretirement, everybody, is not to save more,but it's to spend less.

'Cause if you spend less,you're able to save more. And the key is stop postponingspending less. You don't think $25 here  and $50makes a difference. It all adds up. As soon as you starttaking more action, you'll start feelingmore powerful. And then that fearwill start to go away and then you'll have more  energyto take more action. Alright, there you go, alright. Thank you. [applause] Yes ma'am. (woman)Thank you so much for coming. I've been watching you for years. I'm the senior, I guess, in the room. I'm 80 years old, my husband is 91. We've been contributingto  Roths since they started. But we didn't get a chanceto contribute very long because then we retired.

But I've passed your  informationdown to my children and they are contributing. My question is,I have grandchildren, I have two daughters,I'm  leaving everything to them. What I need to know right  now.is there any way that I can, at my age,or should I start converting some of my traditional IRA fundsto a Roth? Alright, so you have been, because you are nowolder than 70-1/2. (woman)I'm 80, yes. You have been taking requiredminimum distributions from your traditional retirementaccounts, correct? >> Yes.>> And paying taxes on them. >> A lot of taxes.>> A lot of taxes. The answer to your question is,are your children and grandchildren in a  lowerincome tax bracket than you? Because, when you leavethis money to them in a traditional retirementaccount,  and they take it out, they're going to have to  payordinary income taxes on it.

Truthfully, in your situation,at  where you are right now, in retirement, I would  leaveeverything where it is. But is this your granddaughternext to you. (woman)This is my daughter. (Suze)Your daughter,well, that was a compliment. [laughter] I didn't meanto give you a compliment. She came from Orlando to join  mefor this occasion. [applause] Can I talk to your daughterfor one second? So here's what I wantto hear from you. Mommy and Daddy have doneincredible. When you sit here and  listen,and Mommy starts talking about her death and that,how  does that make you feel? Just sad, I want themwith me as long as possible. (Suze)Yeah, and do you yourselfhave children? 'Cause Mommy saidthere's grandchildren.

That would be my sister. Your sister, so whenyou look at your own life, and you see what Mommy and Daddyhave done, can you just tell me howyou feel about your life? When you look at your lifeand retirement? Actually I'm blessed tofeel secure. (Suze) Great. They weregreat teachers. (Suze)Great teachers,so you learned from Mommy. Mommy, out of all the  thingsthat you did in your life, out of all the moneythat you saved, the proudest you should  beand the most priceless gift that you've given yourselfis that you have a daughter that  feelssecure because of you.

[applause] And that is the gift that all of you need to pass onto your children, your beneficiaries, as well  asyou having the conversation with your parents as well. And I can stand up hereand  talk to you about money, as you could tell,from now until eternity. There really isn't one questionthat  you could possibly ask me that I don't know the answer  to,and I think I've proven that to you over all the yearsthat I've done this. But the greatest departing gift, when I talk about the Ultimate Retirement, I'm talking about happiness, I'm  talking about inward happiness, and you knowing who you are,  as well as you have a family that appreciates you, and you appreciate them. And if you're out there, and you're all alone, and you have nobody else, youhave  to at least have yourself.

So the "Ultimate Retirement"  isone where not only do you know everything you need to knowabout money, but you need to know  everythingabout your own life, the purpose of your life, who you are when you can'tdefine yourself by everything around youas well as your job title. You have to know these things. I hope you enjoyedthis journey with us today, I hope you learned enough toat  least start you on the road to an "Ultimate Retirement"  andreally, may retirement one day bless each and every one of you  and may God bless you as well. Thank you so very, very much. [cheers & applause] [piano, bass, & drums play in bright rhythm] Captioning– Armour Captioning & TPT.

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7 Ways One Simple Action Improves Retirement

Jason 0 Comments January 28, 2024 Retire Wealthy Retirement Planning Tips for Retiree's

– In this video, I'm going to blow the lid off of the most common mistake made in retirement and in the process bring clarity to your next move if you carry a lot of debt. Coming up next on "Holy Schmidt." – Holy Schmidt! (object splats) – Recently, I ran into a friend of mine at a hotel lobby in Chicago. He's someone I hadn't seen in years, but someone that I had always meant to keep in touch with, so it was great seeing him.

We got on the subject of debt and it was clear that he had read a lot of the books out there on finance. He talked about good debt, bad debt, no debt, an emergency fund, all of it. But the problem was, in the discussion, it was clear that he was misapplying many of the concepts. He had read the words in the books, but he actually had not applied them correctly. One particular point in the conversation was very tense. He said to me he would rather have $50,000 in low-risk securities and $30,000 in debt, even credit card debt, as opposed to having just $20,000 invested in low-risk securities. When I asked why he thought this, he used some strange end-of-the-world example and said to me that, "If we're all living in caves, and this is the end of the world, I would rather have $50,000 in cash than $20,000 in cash because the credit card companies would have a lot more to worry about than little old me." (thunder claps) "Okay," I said, "But if you're living life in the real world, you have real credit card companies that have debt collectors that go out, and they try to collect the debt.

They actually put a judgment against you. And if you have a judgment against you, they can put a lien on your assets, particularly your checking account, at which point you won't have any cash because everything in there will go to pay down your debt. He looked totally confused. So I help him translate. "If what you're saying is that you would rather pay your grocery bill than your credit card bill, I get it. That will last about a month, maybe two, before things start to go horribly wrong. But let's assume that you are not being hunted by zombies. (zombies snarling) And you're not trying to determine what the best currency is in the apocalypse. (knife sharpening) Debt is real, and it needs to be paid." Here's why you should have no debt in retirement.

By the way, if you have debt, even a lot of debt, I've got you covered. There's another video that I have, outstanding. I'll put a link in the description below that you can use to get rid of your debt very, very quickly. But I digress. Let's get back to this video. First, for those of you who think like an investor, you'll know that the higher the return, the higher the risk, generally speaking. If for example, you invest in US government securities, that means your investment is as safe as the US government itself, that is, if you hold your bonds until maturity, and you don't sell them in a choppy market.

(cow bell ringing) But assuming you hold your government investments until maturity, the five-year US government note is currently paying (keyboard clicking) 3.39% as of five seconds ago according to Bloomberg. On the other hand, if you invest in high-tech Silicon Valley startups, your return could be 15, 20, 30, 50% or more, or you could lose it all. That's how high-risk investments work. But what if you could get US government type risk and Silicon Valley type returns? (cash register rings) Well, that is the best of both worlds, and there's only one way you can really do this, and that's to pay off your outstanding credit card debt. Let me explain. Imagine that you had $10,000 to invest, and you could either put it towards a dividend paying stock that paid a 4% dividend. That would be a very good dividend, by the way. Or you could use it to pay down your credit card debt, and let's make the math easy for this example. Let's assume that your credit card company only charges you 4% on your credit card, but whether you had a 4% dividend paying stock or you had a 4% credit card, your cash flow would look about the same.

You would just use your dividends to pay off the interest on your credit card. Of course, dividends are actually paid semi-annually or annually, and credit card payments are paid monthly. But let's ignore that for just a moment because the point of this is not that. The point of this example is that if you had $400 of dividend income and you use that to pay off the interest on your credit card or you didn't have $400 of interest on your credit card, the cash flow would look basically the same. Now, this is where people get confused. (blows) Earning $400 of dividend income is not better than avoiding $400 of expenses, and credit card companies don't charge 4%. In fact, they charge between 18 and 23% on average. In fact, the average according to Wallet Hub is 19.07% as of today. (whip whips) So your return on investment is 19% in this example, not 4%, and it is as guaranteed as the government interest on the government bonds, maybe even more so 'cause if you don't owe debt, you don't have to pay interest on debt.

That's guaranteed. Is the dividend guaranteed? Nope. In fact, the company can cut the dividend tomorrow, or they can go out of business, and you can lose all of your money. Now here is the sinister part to all of this. If you receive a $400 dividend, do you have to pay taxes on it? In most cases, unless it's in a Roth IRA, but if you avoid $400 of expenses, do you have to pay taxes on the expenses that you avoid it? No. In almost every example, you'll have more spendable cash if you avoid paying a dollar of expense rather than receiving a dollar of income.

Now add a bunch of zeros onto that, and it becomes real money, which brings us to the next point. Even a modest improvement in cash flow improves your retirement picture pretty dramatically. Here's why. When you're living your life, the fun discretionary stuff usually comes from the last 5, 10, maybe even 20% of your monthly income. The average retiree who carries debt spends 38% of their income to service that debt. Now imagine what you could do with 38% more income, particularly noting that the last part of your cash flow is what's used to pay for all of the fun stuff. Then, and this is big, if you have an extra 38% in income, this is a great margin of safety cushion in case something goes wrong. This happened to many of us recently. In 2022, the average retiree lost between 15 and 20% of their account value if they had their assets in a target-based fund, which is over 80% of retirees, by the way. If this was that type of year, (warning bell alarms) and you didn't have that cushion, this would mean that you'd have to continue to sell assets at a reduced price and crystallize the losses just to sustain your life.

But if you're like my friend Rulph from the Chicago Hotel, you're going to use that extra cash flow to build your apocalypse fund. The rest of us call it an emergency fund, by the way, but whatever you wanna call it, it's something that you can designate as extra cash in case the world changes on you all of a sudden. Importantly though, you're using your assets to pay down your debt, so that's taking a step back, but that will allow you to take multiple steps forward because you're not paying high interest on that debt, and you have extra cash flow to rebuild your emergency fund the right way. Next is just the effect of having debt in your life and the effect it has on your health and wellbeing. Let me explain. I am personally in the middle of several weeks of a very challenging point in my life. Now these challenges are good challenges because I'm pushing ahead on projects that are important and the end result is that they will yield some incredible outcomes for both me and for other people.

But it is really stressful, as you can imagine. And while the outcome will be great, this is a lot harder than just doing regular work. But here's the most important thing. At the end of these projects, there will be a lot of celebration (fireworks exploding) both for me and for others. They will have a very positive outcome at the end, but if the stress wasn't due to something that would conclude at a point in time and conclude well, imagine having to deal with that level of stress every single month. This is what I'm talking about. The debt holder is worrying about how to afford life. It's not a carrot, it's a stick, and this worry goes on at the end of every single month. This can very quickly affect your physical and mental health. Next, this will improve your relationship with family and friends. Imagine being able to spend more time and money on those that you love, your spouse, your kids, your friends, being able to go out more often, do more things.

Most relationships that end end for one of a few reasons, money being one of the big ones. So if you're taking the money issue off the table, or at least moving it to the side a little bit, relationships tend to get better. We talked a lot about credit card debt and personal debt in this video, but the question always comes up when talking about debt, what about mortgage debt? Well, there are two answers here. The first is the mathematical answer, and the other is the personal side answer. Mathematically, if you have a mortgage that's 3 or 4%, and inflation is running at 6%, well, there is an argument to be made to keep that debt outstanding as long as possible, but imagine how you would feel if you had all of that debt from the mortgage redirected into your life. That's the personal side, and that's the side that most people actually care about. If you like this video, check out that video.

It's a video on where retirees spend 80% of their income in retirement, and it's one of my most popular. This is Geoff Schmidt. Thanks for watching..

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